Hello XXXXXXXXXXXXX,
Unfortunately, you and your grandparents are exposed to a lawsuit at this time. The co-signer is just as responsible for repayment as the borrower.
If they will not accept payments, the most you can do is try and settle, which you have done. If you think they will accept 50K, then offer them something lower. If there is anyway you can refinance or get a home equity loan, retirment funds, anything that you can borrow against to get them off your back would be helpful. Then you could make payments on that loan. It may be that your Grandparent's will have to help with this type of loan, but they have a large interest in seeing this debt paid. The collection agency must think there are assets available to pay this large amount or they would be accepting payments.
I do not want to scare you, but if they do receive a judgment they can garnish wages, lien real property and seize bank accounts from you and the co-signer. So at this point it seems you need to be focusing on finding a way to get this debt paid, and then pay back the source of that money over time.
If there are no assets to seize, it may be that you just let them do what they want. A Judgment is good for 20 years in New York.
Attorney
General Practice, Wills, Probate, Family, Bankruptcy